Rightsizing is a retrospective on how resources were used. Every resource, container, and auto-scaling group are provisioned with computing, storage, etc. capabilities. Cloud Management tools are measuring how much of those capabilities are being used in the past days and seeing if a cheaper option could have done the same job. The difference in the price of using one type of resource vs. another cheaper option is the “rightsizing savings”.
For a non-technical example, let’s think about a moving truck. Moving trucks have a limited capacity of how much can be moved in the back of a truck. There are various sizes and prices associated with different rental trucks. In this example, rightsizing would be measuring how full the truck was over the rental period and calculating if the job could have been completed with a cheaper option. That way, if more jobs like this arise, the business can save money by using the cheaper alternative.
In theory this is very helpful, but rightsizing savings metrics are misleading in two ways. There are assumptions made with these metrics that skew the reality of what can be saved. As an aggregate figure it obfuscates what truly can be rightsized.